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Bharadwaj Ramesh

One of the several models of set-top boxes... The Finance Ministry's ruling slashing duties on STBs has, apart from depriving the Government of Customs revenue, hit domestic STB makers, who will face formidable pricing pressure from imported boxes.

DOES it matter? Two months before the July 14 deadline, the Government is standing firm on the implementation of CAS in the country's four metros. The top three cable channels (Star, Sony and Zee), despite reservations, are also firm about going pay from that date.

Media planners are waiting to see what will happen and are already evaluating the free-to-air channels. Everybody in the industry is prepared for a window of uncertainty.

Meanwhile, viewers, the currency lubricating the TV economy, are discontent, driven by ignorance and fear. They are also hoping that the government will, as usual, announce a roll-back of some sorts, either on the prices or on the July 14 deadline. After all, VAT was rolled back, so were the telecom tariffs. This expectation has been partly proven right by the reduction in set-top box duty rates from 25 per cent to 5 per cent.

The industry and the government have failed in convincing viewers that this is a better system — one worth investing in and, more important, inevitable. There has been no transparency in the process. It is ironical that for a medium like TV — one that can overthrow incumbent Governments — there is very little information on it about CAS and its implications for the average viewer.

Here is how my neighbour sees it. Today, for Rs 200 a month, she gets 80 channels. Post-CAS, after paying Rs 4,000 for a set-top box that is of little use if she shifts her residence, she still pays Rs 200 for far fewer channels. And this is good for her? Meanwhile, everyday there are newspaper stories about the local cable guy intimidating consumers.

Make no mistake. CAS is good. For years, the TV set was the dumbest piece of electronic equipment in the household. A set-top box can expand the ability of a TV to receive more channels than it is currently capable of. It will do for the television set what a modem did to the PC — help catch up with the rest of the world, and provide a gateway for targeted content, advertising, and interactive services.

In the past 10 years, viewers have gone from paying nothing for 2 DD channels to paying Rs. 200 for 80 channels catering to every need (well, almost!!). It has been a gradual transition, like CAS will eventually be.

But does CAS implementation today have to be this massive? In a manner where nobody is clear as to how it will roll out? What happens to the viewer who has invested in a set-top box when, three months down the line, one major channel decides that it does not have the stomach for the steep reduction in subscriber numbers, and goes free <243>to air?

Though the larger cable operators are putting in place schemes to reduce the financial burden of set-top boxes, the deposit required is still significant for a vast majority of viewers.

What about guidelines and tariff regulations for enterprise consumers such as hotels and hospitals, whose investment into this system will run into lakhs of rupees? Also, there is no inter-operability in set-top boxes among cable operators, (though ironically, there is one for DTH providers) which means that operators could not gain economies of scale when placing orders. And the recent ruling by the Finance Ministry to reduce duties, quite in contrast to its earlier statements, has put into disarray the plans of domestic set-top box manufacturers, whose products will now face formidable pricing pressure from the imported boxes.

Though the Government claims that this reduction will hold good only till the end of July, it is unlikely that the levies will be hiked back to 50 per cent. In addition, this topic has become a political football at a time when all parties should be working to ensure that India's television market catches up with global markets.

What is common to the telecom and the cable tangles? A regulatory regime that is short-sighted, inconsistent, and fails to take into account market realities. The Federal Communications Commission (FCC) in the United States is guided by very simple doctrines— consumer interests, prevention of monopolies, lower prices, and choice. What such spirit guides our government? Protecting our culture just does not cut ice when FTV is free to air, readily accessible to millions of young minds, and Zee English can show the foul-mouthed mob hit Sopranos at 8.30 on Sunday nights.

It is much easier to uproot a sapling than to uproot a tree. And in India, the current cable system is a tree that has grown wild because the Government did not do anything about the industry when it was young and budding. Indian viewers simply do not have a choice of pay-TV providers. We are stuck with cable, which is accountable to no one, and has very poor transmission quality.

Those who can afford it should be able to have an alternative — DTH. The Government should encourage the rise of DTH to provide competition to cable TV. As the American experience shows, only competition from satellite can prod cable operators to do better, and lead to rapid evolution of enhanced TV services. As for me, I am going to subscribe to the cheapest possible set-top box at the lowest possible price, and then wait for DTH!

(The author is an Industry Analyst, Satellite Communications, Frost & Sullivan, Chennai.)

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